Portfolio Mix??

[Original Wally]

OK - we are 61. Pension of $59k (CalPERS / Joint life) + SSDI $30k.
No debt. House = $400k.
Assets = IRA = $400k / After tax portfolio = $200k

Live pretty well off our pensions. MAYBE run negative a few hundred a mo.

Have been using a nice balanced approach to funds... variety of VG small cap, large cap, REIT, Intl, so on.

The ISSUE is all the instability in the market today. Should I be in or out? don't REALLY want to end up losing 20% of the portfolio. Ouch.

THOUGHTS??

[target2019]

Quote:

Originally Posted by AWeinel OK - we are 61. Pension of $59k (CalPERS / Joint life) + SSDI $30k. No debt. House = $400k. Assets = IRA = $400k / After tax portfolio = $200k Live pretty well off our pensions. MAYBE run negative a few hundred a mo. Have been using a nice balanced approach to funds... variety of VG small cap, large cap, REIT, Intl, so on. The ISSUE is all the instability in the market today. Should I be in or out? don't REALLY want to end up losing 20% of the portfolio. Ouch. THOUGHTS??

If the market drops 20%, it is not a realized loss. If you get "out" now, you may miss out on future gains. Probably a good idea to adjust your total portfolio to your desired risk.

[RetireAge50]

20% drop is what $60/mo less temporarily for you ? If not a big deal than stay in for longer term gains. JMO

[gcgang]

If you can't stand to see your holdings decline 20% reduce your equity weighting, probably to the 30-50% range.


Sent from my iPad using Early Retirement Forum

[savory]

I agree with previous comments. Assuming you have been in the market for years, you have experienced the ups/downs.

If I felt a need to adjust finances in a downturn, I would create a plan to reduce spending until the market returns to a level that you feel withdrawals make sense. Live on the 'annuities' until your savings return to the level where withdrawals become comfortable for you.

[pb4uski]

Quote:

Originally Posted by AWeinel ....The ISSUE is all the instability in the market today. Should I be in or out? don't REALLY want to end up losing 20% of the portfolio. Ouch. THOUGHTS??

You should be in, especially if your pension is not COLAed as equities will provide funds to protect your retirement from inflation.

You would only lose 20% if there was a market decline and you sold. What is your current AA?

Your choice is market volatility or inflation eating at your standard of living. One is visible and the other is close to invisible. Chose wisely.

[hnzw_rui]

CalPERS is COLAd pension. Given the fairly large inflation adjusted income (pension + SS), maybe just adjust AA to 50% or less stocks to reduce risk while more or less keeping investments in pace with inflation.

[Midpack]

Quote:

Originally Posted by AWeinel The ISSUE is all the instability in the market today.

What unique or unusual instability exactly?

[karluk]

Quote:

Originally Posted by AWeinel Should I be in or out? don't REALLY want to end up losing 20% of the portfolio.

You have answered your own question - nobody who isn't prepared to lose 20% (or more) in the stock market should ever put money into stocks under any circumstances. You are talking about extremely ordinary market fluctuations that can happen at any time.

Based on what you've posted, you should be looking into moving all of your money into bonds, CDs, TIPs, and any other low volatility investments that appeal to you. Luckily, your pension income and substantial savings should allow you to get away with this type of conservative portfolio. Other retirees, who are more dependent on investment gains to finance their retirement, aren't so fortunate and need more stock exposure than you.

[LOL!]

A worst-case scenario for a broad-market equity fund would be to lose 50% of its value over a year or two, so if you want to limit a possible portfolio loss to just 20%, then have only 40% of your portfolio in equity funds because a 50% loss of 40% of your portfolio would amount to a 20% of portfolio loss.

[38Chevy454]

Agree with the rest, adjust your allocation to fit your risk tolerance. Just understand the effects it can have, such as less potential ability to keep up with inflation. As others suggested, it seems you could do 40-50% equities as max for what you have sort of expressed as a risk tolerance.

[ERD50]

Quote:

Originally Posted by AWeinel .. The ISSUE is all the instability in the market today. Should I be in or out? don't REALLY want to end up losing 20% of the portfolio. Ouch. THOUGHTS??

Quote:

Originally Posted by Midpack What unique or unusual instability exactly?

Right, when has the market been 'stable'?

Quote:

Originally Posted by AWeinel ... Should I be in or out? don't REALLY want to end up losing 20% of the portfolio. Ouch. THOUGHTS??

Quote:

Originally Posted by karluk You have answered your own question - nobody who isn't prepared to lose 20% (or more) in the stock market should ever put money into stocks under any circumstances. You are talking about extremely ordinary market fluctuations that can happen at any time. Based on what you've posted, you should be looking into moving all of your money into bonds, CDs, TIPs, and any other low volatility investments that appeal to you. Luckily, your pension income and substantial savings should allow you to get away with this type of conservative portfolio. Other retirees, who are more dependent on investment gains to finance their retirement, aren't so fortunate and need more stock exposure than you.

Yep, stick to fixed income and hope that we don't see 'all the instability' in inflation, so you don't lose your buying power.

Or stick to TIPS, if you can afford it (and maybe you can).

-ERD50

[purplesky]

Quote:

Originally Posted by AWeinel OK - we are 61. Pension of $59k (CalPERS / Joint life) + SSDI $30k. No debt. House = $400k. Assets = IRA = $400k / After tax portfolio = $200k Live pretty well off our pensions. MAYBE run negative a few hundred a mo. Have been using a nice balanced approach to funds... variety of VG small cap, large cap, REIT, Intl, so on. The ISSUE is all the instability in the market today. Should I be in or out? don't REALLY want to end up losing 20% of the portfolio. Ouch. THOUGHTS??

Stay in the game. You have a pension. Yes the market is over priced big time. But If and when we do get another real correction just buy more.

You are now in position to turn that 600k easily into 1 million if you let it ride.

I have older coworkers who sold and panicked in 2008 and they still today are depressed thinking about how much money they took off the table. Leave the emotion out of it.

[Sunset]

You say you Maybe run negative budget about say 4K/yr.
So take 20K, put it into interest earning bank account. If the market drops, don't sell anything.
Just use the 20K for the next 5 yrs , and by then the market will be back up higher.

Having a cash stash allows you to run full stock investments without panic attacks.

[ETFs_Rule]

Quote:

Originally Posted by AWeinel Have been using a nice balanced approach to funds... variety of VG small cap, large cap, REIT, Intl, so on. The ISSUE is all the instability in the market today. Should I be in or out? don't REALLY want to end up losing 20% of the portfolio. Ouch. THOUGHTS??

Ever heard of bonds? Why 100% in stocks? You're supposed to diversify.

[mrfeh]

Quote:

Originally Posted by AWeinel The ISSUE is all the instability in the market today. Should I be in or out? don't REALLY want to end up losing 20% of the portfolio. Ouch.

Don't try to time the market.

If you are living nicely off pension/SS and don't even need to withdraw from your portfolio, why would you care if it temporarily dropped in value?

[GTFan]

Quote:

Originally Posted by purplesky I have older coworkers who sold and panicked in 2008 and they still today are depressed thinking about how much money they took off the table. Leave the emotion out of it.

Same here, I ER'd having stayed in the market and know folks that went all-cash (or crappy stable fund/insurance contract) and totally missed the bounce back which means they won't be retiring anytime soon.

For the OP - what market instability are you worried about with a $100k guaranteed income? LOL. You're the classic case of someone that needs to go all-stock (spread across the globe), not worry about risk. And get a lower COL if you can't live on $100k, sheesh.